Are You Trading or Gambling? • Hacker News Board

Re: Are You Trading or Gambling?

#251

Post by aphextron » Sat, Feb 27, 2021, 5:35 PM UTC

elygre wrote: post #13

Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It's all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock: First, the "company perspective". An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else…

I'd say this precisely mirrors my journey through day trading.

You start out with the naive mindset, thinking you can make money by finding strong undervalued companies and investing in them with stocks/LEAPS.

Then when you've lost enough money trying that, you move on to technical analysis, thinking you can time the momentum and price action of "predictable" securities. Still thinking it's the "market" you're trying to figure out.

Then once you've lost enough money trying that, it finally hits you. I've been the sucker all along! The way you make money at this is by realizing it's all a game that you're playing against other individual people, not some abstract "market". You buy lots of the underlying stock of something that's trending and start selling OTM "lottery ticket" contracts to the hapless fools (of which you used to be), and you finally start winning.

Re: Are You Trading or Gambling?

#252

Post by jw1224 » Sat, Feb 27, 2021, 5:36 PM UTC

bredren wrote: post #221

jw1224 wrote: post #211

Earlier quoted context omitted.

I’m a terrible trader, and had no shame in admitting it. The moment I saw red, I panicked and sold. If I had open orders on the market, I couldn’t concentrate on anything else. I found trading to be all-consuming, exhausting, and completely demoralising. But I also couldn’t bear to just let my hard-earned savings sit there, wasting away. A cup of coffee cost more than I was earning in annual interest! About 3 months…

Sounds like a fun project. How much rope does your bot have? What did you write it in / what’s the deployed stack?

I was really hoping nobody would ask me about the stack... because... it's PHP! Hahahaha!

Most hobbyists write these things in Python, which I did give some serious consideration to learning... But I know what I'm like — my interest in anything is very short-lived (ADHD!), so I wanted to get a prototype built with a language I'm already proficient in.

It's built with Laravel 8, and hosted on DigitalOcean. It stores and analyses market data in PostgreSQL, and uses Redis for queue management with Laravel Horizon.

Would you believe PHP has its own TA-Lib implementation? https://www.php.net/manual/en/intro.trader.php — that was a nice surprise to discover. This gave me a good head-start on running actual analysis, although my algorithms are pretty simple and only use a few basic indicators to filter out any potential mistakes.

There's no web UI (maybe one day), but it has some simple controls and and reports available through an SSH console. Ideally I won't need to interact with it at all, so Slack notifications keep me informed when anything interesting happens.

I wrote a custom backtester, which runs through the console. There's no pretty graphs or anything, it's basic but makes it extremely easy to experiment with strategy variations on historical data.

I ran it for a week making the smallest trades possible (~$10) whilst I ironed out some kinks and made sure things were working smoothly. It's now week 3, and I'm trusting it with $1500. I'll keep increasing that over time as I make improvements. Individual trades vary from ~$50 to ~$250, depending on algorithmic confidence and profit/loss from the previous day's trading (those margins are pretty meaningless at this level, but it's built to scale nicely in future).

Re: Are You Trading or Gambling?

#253

Post by [deleted] » Sat, Feb 27, 2021, 5:38 PM UTC

earhart wrote: post #239

JMTQp8lwXL wrote: post #231

Earlier quoted context omitted.

Things only have value because we agree they do. The US Dollar is backed by the full faith and trust in the government. "Faith and trust" is as much a digital tulip.

The dollar is also backed by the legal system (which gives the general populace a mechanism to redefine who owns which dollars, e.g. in case of fraud), and the Federal Reserve (which manipulates interest rates and dollar supply levels to try to keep the value relatively stable over time). If bitcoin could solve those problems, and the energy usage problem, I’d use it. As is, it’s solved the double-spend problem - adm…

[deleted]

Re: Are You Trading or Gambling?

#254

Post by devoutsalsa » Sat, Feb 27, 2021, 5:40 PM UTC

ab111111111 wrote: post #104

"Gambling occurs when you have a poor understanding of risk, resulting in either (1) negative expected value bets, or (2) poor bet sizing that leads to ruin." Not so. Top poker players are still gambling, but have an excellent understanding of the risks. Their skill doesn't turn them into investors. Gambling is taking a high risk bet. Whether the expected pay off is high enough to justify the risk and whether you can…

Good poker players are good at taking money from not good poker players. 2 good poker players going head to head is like Yoda dueling Palpatine. 1 good player at a table of not good players is like Anakin with a lightsaber in a room full of younglings.

Re: Are You Trading or Gambling?

#255

Post by monkeyingaround » Sat, Feb 27, 2021, 5:40 PM UTC

nightski wrote: post #249

Why is this such an interesting distinction to people? They act like by not trading you are not gambling. But at the end of the day any investment is about realizing opportunity cost. There is an opportunity cost to holding fiat/cash as well. So in a way you could argue that holding cash is gambling that the fiat/cash is going to provide a better opportunity cost than other investments. What's more interesting to me…

correct. i think it's all just part of a slow narrative shift that is seeking to regulate the market away.

Re: Are You Trading or Gambling?

#256

Post by mancerayder » Sat, Feb 27, 2021, 5:41 PM UTC

NOTaCODERR wrote: post #61

DSingularity wrote: post #50

Earlier quoted context omitted.

GameStop price spiked because of a short squeeze. Short squeeze happened because hedgefunds over extended in their short positions. Do you think GameStop was shorted more than float because of games learned by cryptocurrency traders? That’s a stretch.

It’s really interesting seeing how HN can be so uninformed when the topic changes to their area of expertise, this thread is insightful and I’ll use the search button to get an understanding of how many morons are on this forum, this is great for me as I’m not a coder and thought this crowd was ‘smart’.

What would motivate someone to go on a forum and tell everyone they're "morons"? You wish to express your feelings anonymously? Is this some indicator of mental state in the moment you wrote that?

Re: Are You Trading or Gambling?

#257

Post by JoeAltmaier » Sat, Feb 27, 2021, 5:42 PM UTC

ab111111111 wrote: post #104

"Gambling occurs when you have a poor understanding of risk, resulting in either (1) negative expected value bets, or (2) poor bet sizing that leads to ruin." Not so. Top poker players are still gambling, but have an excellent understanding of the risks. Their skill doesn't turn them into investors. Gambling is taking a high risk bet. Whether the expected pay off is high enough to justify the risk and whether you can…

Don't have to be a top player, to be gambling?

Re: Are You Trading or Gambling?

#258

Post by scatters » Sat, Feb 27, 2021, 5:42 PM UTC

BelenusMordred wrote: post #144

nikanj wrote: post #127

Earlier quoted context omitted.

And thus, bitcoin. A stock that's guaranteed to provide no dividends, do no buy-backs, or deliver any value - aside from the ability to sell it to the next fool for an even greater value.

You forgot no share dilution in this offtopic tangent. Every stock out there can double their issuance if they want to.

A share offering doesn't make existing stockholdings worth less. Usually, they benefit, because it gives the company increased working capital to invest in projects.

Re: Are You Trading or Gambling?

#259

Post by fractionalhare » Sat, Feb 27, 2021, 5:48 PM UTC

whatever1 wrote: post #235

A Positive Expected Valued bet does not mean that it is not gambling. A couple of years ago, the MegaMillions prize was so large that the expected profit from a lottery ticket was higher than the cost of the ticket itself. Buying that ticket was still gambling. The problem with the stock market is that you gamble on speculations. And you do so without any connection to the balance sheet of the company. Most of the sh…

> And you do so without any connection to the balance sheet of the company.

This is incorrect for just about every long/short equity hedge fund.

Re: Are You Trading or Gambling?

#260

Post by seabird » Sat, Feb 27, 2021, 5:48 PM UTC

DSingularity wrote: post #223

BasedInfra wrote: post #59

Earlier quoted context omitted.

Front running is illegal. Its payment for order flow which is earning off the spread while also keep it tight and liquidity in the market.

So... basically front running ?? That’s what it seems like you are describing. They make money when they manage to get ahead and provide the liquidity needed to fill the orders. What am I missing?

It is not front running, and can only be conflated with it if you don't know what front running actually is, don't know what PFOF actually is, or both. Firms that pay for order flow are paying to be the counterparty to transactions that have razor-thin arbitrage opportunities. They are not placing orders with advance knowledge of upcoming orders; they are reacting extremely quickly to fraction-of-a-cent spreads in the price of a security and pocketing the difference.